Shares hit 1-yr closing low on rate hike expectations

Reuters: Shares fell to a near one-year closing low on Tuesday as expectations of an interest rate hike weighed on sentiment, after the International Monetary Fund urged the Sri Lankan Central Bank to tighten monetary policy.

The Colombo stock index closed 0.4% lower at 6,046.79, its lowest close since 30 March 2016. The index shed 0.3% last week, posting its third straight weekly decline.

The IMF urged Sri Lanka’s Central Bank last week to be ready to tighten monetary policy if credit growth or inflation did not abate.

The Central Bank’s second monetary policy review of the year is due on 24 March.

“Retail investors are looking at fixed deposits. Investors will wait until the rates come down or they will invest only if something that could boost the market happens,” said Prashan Fernando, who heads Acuity Stockbrokers.

Shares of Sri Lanka Telecom Plc closed down 2.9%. Biggest listed lender Commercial Bank of Ceylon Plc ended 1.1% weaker, while conglomerate John Keells Holding Plc fell 0.4%.

Foreign investors net bought shares worth Rs. 112.8 million ($ 745,046) in the tenth straight session of net-buying, raising the year-to-date net foreign inflow to Rs. 2.29 billion in equities.

Turnover stood at Rs. 888.2 million, higher than this year’s daily average turnover of Rs. 683.8 million.